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Oxy faces record fine for tainted spring

The Colorado Oil and Gas Conservation Commission on Thursday imposed a record $390,000 fine against Oxy USA and a second penalty of $257,400 for two cases of oil and gas contamination of spring waters northwest of Parachute.

The commission approved the amounts that had been proposed in a settlement agreement between the company and the commission’s staff.

Both incidents involved operating pits without permits. The $390,000 fine was for an incident in the Cascade Canyon area, and the second was for one at Rock Springs.

At Rock Springs, Oxy operated a pit for nearly 10 years without a permit that was needed because it was in a sensitive area. The pit had a liner, but it had been torn.

In the Cascade Canyon case, leaks occurred from an unlined pit, installed in 2007, that would have had to have been lined had a permit been sought.

Tests of one spring in that case reportedly found levels of benzene, a carcinogen, that were 300 times above groundwater standards.

The two incidents of contamination were discovered in 2008. Commissioners applauded Oxy’s work since then to phase out pits and instead use tanks for fluid storage. But they also expressed disappointment and astonishment over the company’s actions leading to the violations.

“It’s hard to believe in 2007 a company such as yours would build an unlined and unpermitted pit in Colorado or anywhere,” commission Chairman Joshua Epel said.

Under the settlement agreement, Oxy admitted to no liability and denied the state’s contention that the contamination resulted in significant environmental impact.

Doug Weaver, Oxy’s operations manager for the Rockies, told commissioners Thursday the company decided about a year-and-a-half ago to switch to tanks for all of its Rockies operations.

“There’s less opportunity for failure if you have a steel tank and secondary containment,” he said.

The commission approved the smaller Oxy fine 7-0.

Commission member Rich Alward of Grand Junction cast the only no vote on the larger fine. He said later that he thought the company’s actions in that incident warranted a higher penalty.

Some commissioners were concerned because their own inspectors didn’t notice for a decade that Oxy had been operating the Rock Springs pit without a permit.

Debbie Baldwin, the commission’s environmental manager, said the agency is working on trying to make sure a permit check is part of each pit inspection.